Key Highlights
- First quarter revenue reached $663M, representing a 69% increase from the prior year and surpassing the $611M consensus
- Earnings per share of $1.01 significantly exceeded the 58-cent analyst forecast
- Second quarter revenue outlook of $715M–$725M came in above the $712M Wall Street consensus
- Platform saw daily active users climb 17% year-over-year to reach 126.8M; average revenue per user increased 44% worldwide
- Shares of RDDT climbed 16% during Friday’s premarket session after the earnings announcement
Reddit delivered impressive first-quarter results that significantly exceeded analyst projections across key metrics. The social media platform reported revenue of $663 million, marking a 69% surge from the $392 million recorded in the same period last year. Earnings per share reached $1.01, substantially outperforming the 58-cent consensus estimate.
Investors responded enthusiastically, pushing the stock up more than 9% during Thursday’s after-hours session before adding another 16% in Friday’s premarket trading. This strong market response came as investors closely scrutinized advertising sector performance following quarterly reports from Meta and Alphabet earlier in the week.
The company’s net income surged dramatically to $204 million compared to just $26 million in the year-ago quarter.
Chief Executive Steve Huffman emphasized that the platform has now achieved seven consecutive quarters of revenue growth exceeding 60%. He pointed to the company’s “record cash flow of more than $300 million” while maintaining minimal capital expenditures of only $1 million.
“When you look across the more than 300 publicly traded tech companies, there’s only one that combines this type of growth, profitability and efficiency, and that’s Reddit,” Huffman told analysts.
Platform Engagement and Revenue Metrics
The platform’s daily active unique users expanded 17% from the prior year to 126.8 million, slightly outpacing the 125.9 million analyst estimate. Within the United States specifically, daily active users totaled 53.5 million, reflecting a 7% year-over-year increase.
Average revenue per user reached $5.23, surpassing the $4.81 consensus forecast. For U.S. users specifically, ARPU came in at $9.63, topping Wall Street’s $8.53 projection.
Huffman indicated that Reddit’s ambition is to achieve 100 million daily active users in the United States, although the company hasn’t specified when it expects to reach this milestone.
Artificial Intelligence and Ad Technology
The company’s AI-powered ad platform is delivering tangible results. The platform leverages technology including an AI copywriting tool specifically designed for Reddit-native advertisements and an automated image cropping system that optimizes creative assets for various ad placements.
This technological approach is enabling Reddit to compete more effectively with larger competitors like Meta’s Instagram and Facebook for advertising budgets.
The “Other revenue” segment, primarily consisting of data licensing agreements, increased 15% year-over-year to $39 million. Google and OpenAI continue to be Reddit’s primary data licensing collaborators.
Huffman characterized these partnerships as extending beyond simple revenue generation, using terms like “citations” and “mind share” to describe their value. He noted that while Reddit doesn’t operate its own data centers or foundational AI models, its strategic partners provide these capabilities.
Chief Operating Officer Jen Wong informed Reuters that Reddit is “still hiring and adding to our talent base” — a notable departure from the workforce reduction strategies employed by Meta, Snap, and Pinterest throughout the past year.
Morgan Stanley analysts said U.S. user growth “remains key to driving multiple expansion for Reddit,” adding it would demonstrate the platform’s relevance “even in a future GenAI enabled and agentic landscape.”
Reddit’s forward price-to-earnings ratio for the next twelve months stands at 30.40, which compares to Snap’s 9.93, Pinterest’s 10.27, and Meta’s 19.05.
Notwithstanding the solid quarterly performance, RDDT stock remains down approximately 36% for the year-to-date period entering Friday’s trading. Both Snap and Pinterest have declined roughly 24% during the same timeframe.
The company’s second quarter revenue guidance range of $715M–$725M exceeded the $712M analyst consensus. Adjusted earnings guidance of $285M–$295M similarly surpassed the $276M average Wall Street estimate.
